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 / First Quarter 2002 / Issue 26(originally published by Booz & Company)


The Human(e) Factor: Nurturing a Leadership Culture

CEOs in this new millennium must be able to provide a vision for the future of the enterprise. Specifically, they must be able to:

  • Identify and implement the central tasks of the enterprise.
  • Fine-tune the central tasks to meet ever-changing business needs.
  • Define the core competencies in product and/or service areas, and consequently drive their further development.
  • Establish a clear understanding of the company’s achievements and be able to articulate its differentiated strengths vis-à-vis the competition fully.

Such visions can never be static. Instead, they must emphasize dynamic processes in which change may be the only constant. Vision statements that are not flexible can do more harm than good. The best insurance against mishaps is a certain amount of courage and the willingness to listen — a leadership kind of mind-set that heeds early recognition of mistakes and is willing to correct them. The real danger lies in shutting oneself off and stubbornly going forward, only because one does not want to admit mistakes.

Of course, correcting a vision statement means having the courage to admit that one is wrong. And there is a direct correlation between the inability to entertain self-criticism and the insistence on outdated, rigid hierarchical structures. To make matters worse, the higher up one is in a hierarchy, the more difficult it can be to admit mistakes in front of colleagues who may be competitors for the next promotion.

On the other hand, exemplary behavior in this area does exist. Witness Jürgen Schrempp’s courage to acknowledge openly DaimlerChrysler AG’s unprofitable investment in Fokker and his role in that decision. Mr. Schrempp shouldered the blame for the entire team. And, in the end, the company and the public honored his courage.

Binding Values and Culture
Continuity in management is, without doubt, a prerequisite for company growth. Yet CEOs and managing directors are remaining in top positions for decreasing periods of time. Because of market-driven needs to maintain performance levels from quarter to quarter, the turnover in the United States currently is higher than it is in Europe.

Executive churn means that continuity of values and clearly defined goals need to become an integral part of an enterprise in order for it to last beyond the tenure of a particular CEO. This continuity can be achieved only if the entire management team addresses values and goals as essential elements of long-term success. Humane leadership focuses on the hearts and minds of the people who work for the company. Of course, that first includes the staff base and the executives who direct the enterprise, but it also can encompass suppliers, dealers, service providers, and other business partners.

You can read the corporate culture in the demeanor of the people in the enterprise and in their ability to collaborate with the partners: Attributes like excellence, social awareness, flexibility, praise/recognition, openness to ideas, and teamwork show positive behavior patterns; approaches like bureaucracy, injustice, arrogance, knowing-it-all, and regimentation show negative behavior patterns.

The three biggest assets of a corporate culture are justice, fairness, and independence. Justice is a constitutional part of every democracy and democratically rooted organization. Fairness means being considerate toward those who are weaker, doing without personal advantages, and recognizing the achievement of those who are better. Independence is the basis for freedom in building and expressing one’s opinion and the acceptance of responsibility. The strong CEO secures employee confidence in the shared objectives, first through his or her own behavior, and second through noticeable corrective measures in cases of misbehavior.

Considering the daily pressures and short tenure of a CEO, establishing a corporate culture, improving it, and making it last requires well-defined priorities. The imperatives include:

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  1. James M. Citrin and Thomas J. Neff, “Digital Leadership,” s+b, First Quarter 2000; Click here.
  2. Bruce A. Pasternack, “Leadership: Dreamers with Deadlines,” s+b, Fourth Quarter 2001; Click here.
  3. Bruce A. Pasternack, Thomas D. Williams, and Paul F. Anderson, “Beyond the Cult of the CEO: Building Institutional Leadership,” s+b, First Quarter 2001; Click here.
  4. James O’Toole, Leading Change: Overcoming the Ideology of Comfort and the Tyranny of Custom (Jossey-Bass Inc. Publishers, 1995)
  5. Bruce A. Pasternack and Albert J. Viscio, The Centerless Corporation: A New Model for Transforming Your Organization for Growth and Profit (Simon & Schuster, 1998)
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